Top Palestinian officials end standoff, form Cabinet

RAMALLAH, West Bank -- Yasser Arafat and his prime minister-designate, Mahmoud Abbas, ended their bitter standoff over the composition of a new Cabinet on Wednesday, clearing the way for a new Mideast peace initiative backed by Washington.

The long-awaited "road map" holds out the prospect of ending 31 months of Israeli-Palestinian fighting and establishing a Palestinian state. It also would respond to pressure on the United States by Arab and European countries to promote Mideast peace at a time when its troops occupy Iraq.

The United States and Israel have boycotted Arafat, accusing him of links to terrorism. President Bush said he would unveil the plan only after establishment of Abbas' government -- which U.S. and Israeli officials hope will amount to a means of sidelining Arafat.

"When that happens we will officially provide the road map to the parties soon thereafter," White House press secretary Ari Fleischer said Wednesday.

Arafat backs down

Wednesday's deal was made possible when Arafat backed down under intense international pressure and withdrew his challenge to Abbas' security team in exchange for a promise he would be consulted on major decisions -- including, presumably, a crackdown on Palestinian militias.

Israeli Prime Minister Ariel Sharon responded cautiously Wednesday night, saying only that it was, "of course, very important that on the other side there should be a person whose wish is for an end to terror and for peace." Israel, he said, "will make every effort to reach a diplomatic agreement that, God willing, will lead to peace."

Deputy Prime Minister Ehud Olmert said "one should judge the deeds and not the declarations."

"We have to wait and see if the new Cabinet will, in fact, be sworn in and how it will act, taking into account Arafat's staunch resistance to it and his capacity to undermine any process of reform," he told CNN.

Palestinian and Egyptian officials said on condition of anonymity that Arafat, in exchange for backing down, was given guarantees regarding his personal safety and was told Egypt would ask Israel to lift a travel ban on him in effect since December 2001. Several Israeli Cabinet ministers have called for Arafat's expulsion from the West Bank, a move opposed by Washington.

The dayslong wrangling was a sign of Arafat's continued resistance to sharing power after four decades as the unchallenged Palestinian leader. The crisis also suggested Arafat will try to limit Abbas' authority, while the new premier can count on international backing in such confrontations.

The road map was worked out late last year with the European Union, Russia and the United Nations. The Palestinians have agreed to accept the proposal in principle. Israeli leaders also have indicated approval, but have raised objections.

It calls for an end to Palestinian attacks and a freeze on any expansion of Jewish settlements in the West Bank and Gaza, followed, perhaps as early as this year, by a Palestinian state with provisional borders. Final borders, the status of Jerusalem and the fate of Palestinian refugees would be decided in later stages.

Secretary of State Colin Powell said Bush was prepared to pressure Israel and the Palestinians to implement the plan.

"He (Bush) knows with more certainty than he did before that this is where we have to turn our attention to," Powell told CBS on Tuesday.

The United States has backed Abbas in the current dispute.

"He (Arafat) ... is still not showing the kind of leadership that we need in a Palestinian leader," Powell said.

Under the emerging arrangement, Abbas -- who has called the violent uprising against Israel a mistake -- would control the important security force and day-to-day government. That means he would be able to both crack down on militants and ensure official funds do not reach them.

But Arafat retains control over other security bodies -- and, critically, appears to retain the final say in any peace talks with Israel, if they restart.

Abbas, emerging from Arafat's office, played down the extent of his falling-out with the Palestinian leader, even though he was quoted earlier as saying the relationship was beyond repair.

"This wasn't a crisis," he said. "There were obstacles, and they have been removed."

Abbas released his Cabinet list, which requires the approval of the 88-member Palestinian legislature, late Wednesday. Parliament Speaker Ahmed Qureia said he would convene legislators within a week, possibly Sunday or Monday.

Abbas and Arafat ended their dispute just seven hours before a midnight Wednesday deadline, after Egyptian intelligence chief Omar Suleiman shuttled between the two seeking compromise and Arab and European leaders called Arafat.

Arafat announced the agreement while holding hands with Abbas and Suleiman, who flanked him at the Cabinet table in Arafat's headquarters in the West Bank town of Ramallah.

By law, Abbas has the sole authority to choose his ministers, but in this case required Arafat's blessing. The ruling Fatah party sided with Arafat in the dispute, and Fatah controls a solid majority in parliament.

Fatah had supported Abbas, also known as Abu Mazen, for the new post but he lost some support when he appointed to the Cabinet a number of politicians tainted by corruption, and failed to bring in new faces.

One of the appointments Arafat tried to block was that of former Gaza security official Mohammed Dahlan to a key security post. Arafat demanded to keep on one of his loyalists, Hani al-Hassan, as interior minister in charge of security.

Abbas insisted on firing al-Hassan, who has made no headway in reining in militant groups, and instead named himself interior minister. Dahlan, who has the backing of the United States and Europe because of his willingness to confront the militias, was appointed state minister for security affairs.

Commenting on the emerging Cabinet, Hamas spokesman Abdel Aziz Rantisi suggested Wednesday that Dahlan was a traitor, saying: "You have to be on the side of your people, not the side of your enemy."

Rantisi said Hamas, which has killed hundreds of Israelis in shootings and bombings, would not halt attacks.

Palestinian Planning Minister Nabil Shaath said he was told he will be foreign minister -- a role he has filled in recent years with frequent meetings with foreign leaders.

Finance Minister Salam Fayad, a former International Monetary Fund official, will remain in his post. Fayad has been praised by the international community for managing the murky Palestinian Authority finances and controlling some of Arafat's reputed slush funds.